H.R. 1554 — Freedom from Government Competition Act of 2025

This section states congressional findings that (1) private sector businesses constitute the strength of the U.S. economic system; (2) competitive private enterprises are the most productive, efficient, and effective sources of goods and services; (3) unfair government competition with the private sector is detrimental to the U.S. economic system; (4) such competition is at unacceptably high levels in scope and dollar volume; (5) current law and policy have failed to address the problem adequately; and (6) it is in the public interest for the federal government to rely on the private sector to provide goods and services for federal agencies and to avoid unfair competition.

This section defines the term “agency” for purposes of the Act to mean (1) an executive department as defined by 5 U.S.C. 101 (i.e., one of 15 cabinet-level departments, such as State, Treasury, Defense, Justice, Interior, Agriculture, Commerce, Labor, Health and Human Services, Housing and Urban Development, Transportation, Energy, Education, Veterans Affairs, or Homeland Security); (2) a military department as defined by 5 U.S.C. 102; and (3) an independent establishment as defined by 5 U.S.C. 104(1).

This section establishes a policy that the federal government rely on commercial sources for products and services; refrain from providing them if procurable more economically from private sources; and use federal employees only for inherently governmental functions (as defined in the Federal Activities Inventory Reform Act of 1998). It requires agencies to procure all necessary goods and services from private sources unless (1) required by law or (2) the agency head certifies to Congress per Office of Management and Budget (OMB) regulations that they are necessary for national defense or homeland security, mission-critical or inherently governmental, or unavailable from private sources. For non-exempt goods and services, agencies must pursue divestiture of federal involvement, competitive contracting (per 41 U.S.C. §152 and 10 U.S.C. §2302), or public-private competitive sourcing per OMB procedures if private sector performance provides best value; agencies may subsequently use federal employees following such a competition if determined to provide best value. The OMB director must issue implementing regulations, including for state and local recipients of federal funds.

This section directs the Director of the Office of Management and Budget (OMB), after consultation with the Comptroller General, to conduct an annual study evaluating activities across federal agencies—including those identified as commercial or inherently governmental in inventories required by the Federal Activities Inventory Reform Act of 1998—and to transmit a report to Congress by June 30 each year. The report must include (1) an evaluation of justifications for exemptions from competition under section 4(c); and (2) a schedule for transferring commercial activities to the private sector under section 4(d), with transfers to be completed within five years of the report's transmittal date.